⚠ The Loss Is Cash Now and the Annuity Is a PromiseModerate threat

GE Aerospace (GE) — threat to the moat

About $1.2 billion of realised loss, against revenue that arrives between 2030 and 2055 if the aircraft flies.

The elegance of the razor-and-blade model conceals a genuine exposure: the loss is definite and the compensation is not.

When the money movesYear 0engine deliveredat a gross lossYears 1-5aircraft flies;nothing earnedFirst shop visitthe annuity beginsYears 5-30overhauls andspare parts$1.2bn of realised loss across 2022-2025 against $163,029m of contracted services.
The loss is cash today. The compensation depends on the aircraft flying, the airline surviving and the visit arriving.

GE Aerospace has recognised roughly $1.2 billion of cumulative gross loss on equipment across 2022 to 20251. That is real cash paid to suppliers and real cost through the income statement. What sits against it is an expectation that engines delivered today will generate overhaul and parts revenue between roughly 2030 and 2055.

Three things can break that expectation, and each has happened to somebody in this industry. An aircraft programme can be cancelled or curtailed, stranding the engines built for it. An operator can fail, and the fleet can be parked rather than flown — GE Aerospace's own description of its installed base is careful to say it includes parked aircraft in addition to fleet in service2. And an engine can prove more durable than assumed, which sounds like good news and reduces the number of shop visits it generates.

The company also carries the risk in a second, less visible form. It participates in financing arrangements in an effort to secure an installed base that establishes aftermarket sales associated with its products3 — which is to say that in some cases it helps the customer pay for the engine it is selling below cost.

What makes the exposure tolerable is diversification across 50,000 commercial engines and hundreds of operators, and the fact that the aftermarket is contracted rather than hoped for: $163,029 million of it sits in the remaining performance obligation4.

The falsifying number is the relationship between deliveries and shop visits. Commercial engine deliveries went from 1,911 to 2,386 in 2025 while internal shop visit revenue grew 24%5. Deliveries rising and shop visit revenue flat, for two consecutive years, would mean the losses being taken today are not converting.

References
  1. Moat Explorer calcGE Aerospace has recognised roughly $1.2 billion of cumulative gross loss on equipment across 2022 to 2025.
    Moat Explorer calculation from GE Aerospace's reported figures. Equipment gross margin: sales of equipment less cost of equipment sold was $(314)M in 2022, $(582)M in 2023, $(67)M in 2024 and $(223)M in 2025, about $1.2 billion cumulatively, and about -1.8% of equipment sales in 2025 against -0.7% in 2024. Services gross margin: (18,345-10,836)/18,345 = 40.9% in 2022, 42.4% in 2023, 43.8% in 2024 and (30,163-16,586)/30,163 = 45.0% in 2025. Services RPO of $163,029M against services revenue of $30,163M is 5.4 years, and $163,029M of $190,564M is 86%. LEAP deliveries of 1,570 + 1,407 + 1,802 + 1,030 in the first half of 2026 total 5,809 since the start of 2023. LEAP was 1,802 of 2,386 commercial engines in 2025, 75.5%. — FY2022-FY2026 · publ. September 2026 · source ↗
  2. ReportedAn operator can fail, and the fleet can be parked rather than flown — GE Aerospace's own description of its installed base is careful to say it includes parked aircraft in addition to fleet in service.
    GE Aerospace Form 10-K, FY2025 - Item 1 general and Item 2 Properties — the installed base of approximately 50,000 commercial and 30,000 military engines and the statement that it supports an aftermarket representing approximately 70% of revenue, the FLIGHT DECK operating model, customers in approximately 120 countries, the facility count, human capital and employee numbers, the intellectual property discussion, the research and development table splitting company-funded from customer- and partner-funded spending, and the engine testing milestones. — FY2025 · publ. January 2026 · source ↗
  3. ReportedIt participates in financing arrangements in an effort to secure an installed base that establishes aftermarket sales associated with its products — which is to say that in some cases it helps the customer pay for the engine it is selling below cost.
    GE Aerospace Form 10-K, FY2025 - Management's Discussion and Analysis — consolidated results, profit and operating profit margins, adjusted earnings per share, total remaining performance obligation and its year-on-year movement, cash flow from operations and free cash flow, the share repurchase programme, borrowings and the financing-arrangement discussion. — FY2025 · publ. January 2026 · source ↗
  4. ReportedWhat makes the exposure tolerable is diversification across 50,000 commercial engines and hundreds of operators, and the fact that the aftermarket is contracted rather than hoped for: $163,029 million of it sits in the remaining performance obligation.
    GE Aerospace Form 10-K, FY2025 - Management's Discussion and Analysis — consolidated results, profit and operating profit margins, adjusted earnings per share, total remaining performance obligation and its year-on-year movement, cash flow from operations and free cash flow, the share repurchase programme, borrowings and the financing-arrangement discussion. — FY2025 · publ. January 2026 · source ↗
  5. ReportedCommercial engine deliveries went from 1,911 to 2,386 in 2025 while internal shop visit revenue grew 24%.
    GE Aerospace Form 10-K, FY2025 - Segment Operations — Commercial Engines & Services: segment revenue, profit and margin, commercial engine and LEAP unit deliveries, internal shop visit revenue growth, the CES remaining performance obligation, the 2025 engine commitments from Qatar Airways, Emirates, International Airlines Group, ANA Holdings, Malaysia Aviation Group, Korean Air, Cathay Pacific and Pegasus, and commercial departures growth. — FY2025 · publ. January 2026 · source ↗
Sources
Generated September 23, 2026